Chapter 9: Q7E (page 431)
Using the data in situation aof Exercise 9-5, prepare the employer’s September 30 journal entries to record
the employer’spayroll taxes expense and its related liabilities. (Round amounts to cents.)
The payroll taxes expense of the company is $82.20
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Merger Co. has 10 employees, each of whom earns \(2,000 per month and has been employed since
January 1. FICA Social Security taxes are 6.2% of the first \)118,500 paid to each employee, and FICA
Medicare taxes are 1.45% of gross pay. FUTA taxes are 0.6% and SUTA taxes are 5.4% of the first $7,000
paid to each employee. Prepare the March 31 journal entry to record the March payroll taxes expenses.
(Round amounts to cents.)
Question: On November 10, 2016, Lee Co. began operations by purchasing coffee grinders for resale. Lee uses the perpetual inventory method. The grinders have a 60-day warranty that requires the company to replace any nonworking grinder. When a grinder is returned, the company discards it and mails a new one from Merchandise Inventory to the customer. The company’s cost per new grinder is \(24 and its retail selling price is \)50 in both 2016 and 2017. The manufacturer has advised the company to expect warranty costs to equal 10% of dollar sales. The following transactions and events occurred.
2016
Nov. 16 Sold 50 grinders for \(2,500 cash.
30 Recognized warranty expense related to November sales with an adjusting entry.
Dec. 12 Replaced six grinders that were returned under the warranty.
18 Sold 200 grinders for \)10,000 cash.
28 Replaced 17 grinders that were returned under the warranty.
31 Recognized warranty expense related to December sales with an adjusting entry.
2017
Jan. 7 Sold 40 grinders for $2,000 cash.
21 Replaced 36 grinders that were returned under the warranty.
31 Recognized warranty expense related to January sales with an adjusting entry.
Required
1. Prepare journal entries to record these transactions and adjustments for 2016 and 2017.
2. How much warranty expense is reported for November 2016 and for December 2016?
3. How much warranty expense is reported for January 2017?
4. What is the balance of the Estimated Warranty Liability account as of December 31, 2016?
5. What is the balance of the Estimated Warranty Liability account as of January 31, 2017?
Noura Company offers an annual bonus to the employees if the company meets certain net income goals.
Prepare the journal entry to record a $15,000 bonus owed to its workers (to be shared equally) at calendar year-end.
Which payroll taxes are the employee’s responsibility and which are the employer’s responsibility?
Refer to Apple’s balance sheet in Appendix A. What is the amount of Apple’s accounts payable as of September 26, 2015?
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